These policies achieved something remarkable, a terrific leap for working women. But they brought surprising downside risks, according to a 2014 paper by the economists Francine Blau and Lawrence Kahn, who have extensively researched the gender wage gap around the world.
They pointed to a tradeoff between staying in the workforce and getting ahead: European women are more likely to work. But they are less likely to have advanced careers or hold management positions than American women. Why?
In Europe, women are less likely to quit after having a baby, thanks to the generous parental leave policies of many countries there. But women also spend more weeks away from the office. When they return, they’re less likely to be promoted, having been out for so long. What’s more, several European countries have passed laws that give workers the right to demand a shift to part-time work without penalty. This encourages many women to take part-time jobs when they would otherwise work full-time. “Entitlements to long, paid parental leaves and part-time work may encourage women who would have otherwise had a stronger labor force commitment to take part-time jobs or lower-level positions,” the economists conclude. In short: It seems Europe boosts women’s labor participation at the expense of their career advancement.
Economic policy is always an attempt to achieve ideal outcomes in a world where ideal outcomes are impossible: to manufacture abundance within a world governed by scarcity. Forty years ago, the economist Arthur Okun published the book Equality and Efficiency: The Big Tradeoff. His thesis, if you couldn’t tell from the title, was that there is a tradeoff between policies that seek equality (e.g. high taxes and poverty spending) and policies that seek efficiency (e.g. low taxes and lean regulation).
In the last few years, many economists have argued that this “big tradeoff” isn’t so big, and it might not even be a tradeoff. In fact, equality might even make economies more efficient. New research summarized by economists at the OECD suggests that “when income inequality rises, economic growth falls” in large part because the poor are less likely to get an education and a productive job. A meta-analysis of preschool programs found that excellent early-childhood education programs can “generate benefits well in excess of costs.” Taxing the rich to redistribute money to the poor (particularly to poor kids) seems to improve overall growth. The big alliterative tradeoff, perhaps, isn’t between efficiency and equality but rather between greed in the short term and growth in the long term.
The Democratic Party is relatively united in its quest to make the United States a little more like Europe. Like a vision of America’s future, Europe is witnessing many of the changes that could eventually visit the United States, including falling religiosity, declining marriage and fertility rates, higher overall taxes, and far more generous social spending.